TOKYO- The dollar scaled a two-week peak against its major peers on Thursday, as a rout in Treasuries improved the currency’s allure due to both higher US yields and demand for safe haven assets.
The dollar pushed to a two-week top versus the euro and extended its rebound from a more than two-month low to sterling following a two-day, 15-basis point jump above 4.6 percent for long-term Treasury yields
Spurred by a spate of stronger-than-expected economic data and a run of poorly received auctions, the Treasury market rout has spooked investors, sending global equities sliding sharply and spurring a rush to the safest assets.
The dollar index which measures the currency against six major peers, including the euro, sterling and the Japanese yen, reached the highest since May 14 at 105.17 on Thursday, following a 0.5 percent advance in the prior session.
“While countries globally have been debating USD dependence, it still remains a safe haven,” TD Securities strategists wrote in a note outlining “the basis for our medium-term stronger USD view.”
US securities “are still considered the asset of choice in times of uncertainty given high liquidity, stable democratic institutions, deep banking systems, and treatment of most domestic institutions as ‘too small to fail’ with government help ready at hand,” they wrote.
The euro slipped to $1.079375 for the first time since May 14, and sterling sank to $1.2696, continuing its retreat after reaching $1.2801 on Tuesday for the first time since March 21. The yen, however, climbed off an overnight four-week low of 157.715 per dollar to last trade at 157.36.
Japan’s currency has been marching steadily lower this month, heading back toward the 34-year trough of 160.245 from a month ago, which spurred a rapid rebound that market players strongly suspect to have been driven by two rounds of dollar-selling intervention by the Ministry of Finance and Bank of Japan.
